KUALA LUMPUR: MCA-linked Matang Bhd, which was just listed in January this year, said it is expecting stable performance for the remaining months in its financial year ending June 30, 2018 (FY18), after turning in strong results for its first quarter, according to its chairman Datuk Teh Kean Ming.
In the first quarter ended SEpt 30, 2017 (1QFY18), the plantation company's net profit more than doubled year-on-year to RM1.43 million from RM687,000, as revenue climbed 39.6% y-o-y to RM2.75 million from RM1.97 million, lifted by a 40% rise in production volume amid flattish crude palm oil (CPO) prices. MCA has a 11.86% indirect stake in Matang.
For the whole of FY18, Teh expects CPO price to decline to an average of RM2,500, after noting trends in rival soybean and vegetable oils prices and global demand.
“We predict that the average price should hold on to RM2,500. This should provide decent margins for the company. Anything above that would be a bonus,” Teh told theedgemarkets.com after the ACE Market listed-company's annual general meeting held here on Friday.
He also expects Matang's annual fresh fruit bunches (FFB) yield to maintain between 17 tonnes and 18 tonnes per hectare (ha), barring volatility in CPO prices, unforeseen adverse weather conditions, and disruption in labour supply.
Currently, 60% of the company's plantations are in the prime age of between 10 and 20 years old. Its total hectarage is 1,094.1ha, located within districts of Tangkak and Segamat in Johor.
On its planned RM180 million land acquisition in Raub, Pahang, which has been put on hold due to an injunction granted by the court, Teh said the conditional Letter of Intent (LoI) has not been withdrawn.
“Our conditional offer is still valid. It depends on how fast the vendors can sail through, but it (the acquisition) will most likely not happen in this financial year as it is still subject to satisfactory due diligence and approvals,” he explained.
In July, Matang issued a non-legally binding LoI to Raub Mining & Development Co Sdn Bhd (RMDC) and Raub Oil Mill Sdn Bhd, stating its intention to buy two parcels of land totalling 1,707.69ha from them. The land comes together with an oil palm plantation, buildings, plant, machinery, equipment and a palm oil mill, as well as vehicles and stocks of the aforesaid plantation and mill.
But on Sept 28, Matang announced that it has been notified by RMDC of the injunction, and that RMDC had instructed its solicitors and counsel to prosecute an appeal against the court's decision.
In the mean time, Teh said the company will explore other opportunities to expand its hectarage in the country, and is looking at Sabah and Sarawak in view of the more sizeable land banks there.
Looking forward, Teh said the company may see a “natural progression”, from selling harvested fruits to external parties to eventually venturing into the business of crude oil processing, in line with its hectarage expansion plans.
At closing bell on Friday, shares in Matang settled half a sen or 4.76% lower at 10 sen -- below its initial public offering price of 13 sen apiece -- giving it a market capitalisation of RM181 million.